The current week has been relatively low-key for UK Referendum announcements. Although ‘Brexit’ news has been coming in at a fairly regular pace across the course of the whole week, the latest announcements have been of fairly low volatility and had little impact on the Pound to Euro (GBP/EUR) exchange rate.
Week Kicks off with Possible US Intervention and Turkish Interference News
The week began fairly quietly, with warnings making up the bulk of the day’s relevant news. On the ‘In’ side of the argument, Chancellor George Osborne quelled concerns that Turkey would be joining the European Union by stating that it was not ‘on the cards’. The possibility had been brought up as part of ongoing talks to arrange a solution to the flood of migrants and refugees into Europe, but the concern was that the inclusion of such a volatile nation into the EU would seriously destabilise the union.
Further ‘In’ support came from the Green Party, which launched its campaign in favour of the UK remaining in the EU. Party officials acknowledged that the EU had its problems, but were of the opinion that these would be easier to fix from within than without.
The Pound to Euro (GBP/EUR) exchange rate started the week on a low as investors responded to the Eurozone’s better-than-forecast Industrial Production data.
Tuesday – Polls, a (Possibly) Weak NATO and BoE Forecasts Weigh on GBP Exchange Rate
The most notable occurrence on Tuesday was a poll published by The Telegraph, which appeared to indicate that ‘Out’ campaigners were ‘more motivated’ to support their cause by comparison to the more flagging ‘In’ supporters.
The ‘In’ campaign gained traction when Head of the US Army in Europe, Lieutenant-General Ben Hodges, stated that in the event of a ‘Brexit’, the EU would be deprived of a key ally in the tense struggle to contain an increasingly militarily active Russia.
Additionally, The Telegraph’s poll result was countered by a survey from the Confederation of British Industry (CBI), which showed that 80% of members were in favour of a ‘Remain’ vote.
On the economic side of events, Bloomberg made a highly pessimistic forecast for the effects of a ‘Brexit’ outcome, stating that if the UK left the EU it could fall into recession, which would force the Bank of England (BoE) to potentially cut the interest rate in response.
All of this conspired to keep the Pound Sterling to Euro (GBP/EUR) exchange rate under pressure as the week continued.
UK Budget Announcement on Wednesday Featured ‘Unwelcome’ Referendum Mention
The biggest new by far on Wednesday was George Osborne’s 2016 Budget Announcement. During the speech, the Chancellor brought up a tax on sugary drinks, a proposed cut in disability benefits and a forecast to be at a £10bn budget surplus by 2020, despite calculations factoring in borrowing of around £40bn in 2018.
The Chancellor courted controversy with his own party during the delivery, when he insisted that the UK would be ‘better off’ within the EU, which prompted cries of opposition from many Conservative party members.
The development meant that the Pound (GBP) posted further declines against the Euro and failed to benefit from a fairly optimistic set of UK employment figures. The UK added fewer positions than expected but average earnings improved.
Further Obama Opposition and BoE Warnings Came on Thursday, Pound Boosted by BoE
Yesterday effectively brought repeat performances from Referendum arguments that had been seen earlier in the week.
One such instance of déjà vu was the publication of an open letter from MPs that opposed any intervention in the Referendum by President Obama, with the authors foreseeing that comments from the President would be an ‘unfortunate milestone’ to cap his presidency with.
The BoE was back in the headlines with a forecast that the UK could be economically damaged in the run-up to the vote proper, owning to the gathering winds of uncertainty that are sure to be present as June 23rd approaches.
The BoE’s other contribution of the day was its minutes for March, which sent the Pound Sterling (GBP) exchange rate soaring when it was discovered that an interest rate cut had not been entertained by the Bank.
Opinions Today from Hong Kong Billionaire and FTSE 100 Member, GBP/EUR Ends Week Higher
Today has closed the week on a soft note for ‘Brexit’ news, with a single argument materialising on either side of the debate.
Going against UK-EU membership has been Peter Hargreaves, the co-founder of brokerage firm Hargreaves Lansdown. In Hargreaves’ opinion, after leaving the EU, ‘that little bit of unknown will be an absolute fillip to everyone’.
Meanwhile, the richest man in Hong Kong, Li Ka-shing has stated that in the event of a ‘Brexit’, he (and other wealthy investors, presumably) would scale back investments in the UK owing to the heightened levels of uncertainty that would result from such an outcome.
The Pound Sterling to Euro (GBP/EUR) exchange rate was able to consolidate earlier gains as investors dwelt on some fairly dovish commentary from European Central Bank (ECB) President Mario Draghi.
That’s it for the UK Referendum roundup so far today, but we’ll be back next week with all the latest UK-EU news to keep you up to speed with the situation as it unfolds.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2844 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7787 today.